Dually Registered Investment Advisor/Broker Chad Mackland Barred by FINRA After Allegations of Failing to Cooperate in Investigation of Amended U5 Form
Chad Mackland (CRD#: 4933804) was a dually registered Investment Advisor and Broker at Lion Street Financial, LLC in Council Bluff, IA. He entered the securities industry in 2005 and previously worked for MML Investors Services, LLC and Northwestern Mutual Investment Services, LLC.
According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in March 2021, FINRA sanctioned Chad Mackland, indefinitely barring him from all capacities. The FINRA sanction states, “Without admitting or denying the findings, Mackland consented to the sanction and to the entry of findings that he failed to provide documents and information requested by FINRA in connection with its investigation of an amended Form U5 filed for Mackland, that disclosed that criminal felony charges were pending against him for, among other things, theft and fraudulent sales practices.”
For a copy of the FINRA sanction, click here.
In addition, Chad Mackland has been the subject of several customer complaints, including one that remains pending, including the following:
● August 2020—”Fraudulent Sales Practices under $10,000;” “Fraudulent Sales Practices over $10,000;” “Theft in the First Degree by deception;” and “Commit Fraudulent Sales Practices, Theft, or fraudulent practice, an act for financial gain on a continuing basis, that is punishable as an indictable offense.” These charges are pending.
● April 2020—”The Firm received a FINRA Dispute Resolution Arbitration alleging the representative churned the customer’s accounts, recommended unsuitable transactions, made fraudulent, false, and misleading representations, communications, and transactions and breached his fiduciary duties.” The customer dispute is pending; damages of $2,871,000 are sought.
● September 2018—”Terminated in connection with misrepresentations to customers related to traditional life insurance policies.” Chad Mackland was discharged by MassMutual.
● August 2016—”Registered representative resigned while under internal review for questions relating to his sales practices. The investigation is on-going.” Chad Mackland was permitted to resign voluntarily from Northwestern Mutual Investment Services, LLC.
For a copy of Chad Mackland’s FINRA BrokerCheck, click here.
Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.
Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.
Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.
Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, other investments, financial situation and needs, and tax status; other factors to consider include the investor’s investment objectives, time horizon, liquidity needs, risk tolerance, and any other relevant details disclosed by the customer.
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